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In the last few Updates, we have included some of the
many rumors circulating about a release of a Senate 2010
Supplemental Operating Budget proposal. Although Senate
budget-writers had originally planned on releasing their
proposal this week, they are now publicly saying that
Monday, Feb. 22, is the earliest they will be able to
release their plan. We have also recently noted that
Gov. Gregoire is preparing a tax package to present to
the Legislature. Originally, the governor’s revenue plan
was set to be released yesterday, but apparently it was
not yet complete. Earlier today, however, she held a
press conference to official unveil her proposal — more
on that below.
Before any tax plan can be approved, it must first
garner a 2/3rds vote of the House and Senate — unless
the Legislature first amends Initiative 960. That effort
continues. Last week, the Senate adopted
SB 6843 to suspend I-960’s tax-raising hurdles.
Unfortunately, for the Senate, they adopted the wrong
bill and had to go through the whole exercise again,
this time adopting an amended
SB 6130. On Saturday, the House Finance Committee
held a very lengthy public hearing on the bill and
ultimately passed it onto the full House. Last night,
following the Legislature’s 5:00 pm “house of origin”
cut-off, SB 6130 was brought to the House floor — and
Republicans immediately moved to “indefinitely postpone”
action on the bill. Almost every House member took time
to support or oppose the motion and after over five
hours of debate the motion was defeated. Following the
defeat of the motion to set the bill down, it was moved
to Second Reading and House members spent another 45
minutes addressing minority member amendments to SB
6130. Each was defeated, but with the hour growing late
(nearing midnight), the Speaker promptly adjourned the
session rather than moving the bill to Third Reading,
making it eligible for debate and final passage. This
morning, the House reconvened and moved the bill to
Third Reading and, after another almost two hours of
debate, recessed to allow members to head to public
hearings in Committees. The full House is scheduled to
reconvene and continue the final debate on SB 6130 at
8:00 pm this evening. At some unknown time later
(presumably in the wee hours between Wednesday and
Thursday) the bill is expected to be adopted. Because
the House Finance Committee approved amendments to the
bill, it has to return to the Senate, where beleaguered
Senators will have to address the issue a third time.
With the stage nearly set for tax increases, the
specific talk of tax packages will heat up. We’ve
already seen revenue bills which would: close tax
loopholes and eliminate tax exemptions; temporarily
increase the state sales tax; increase the state estate
tax on “high wage earners;” and extend the sales tax to
candy and gum. Each plan has garnered some attention;
however, none of the individual plans has had much
movement. Attempting to push the issue and, in her
words, “take leadership in the debate,” Gov. Gregoire
earlier today held a
press conference to discuss her
proposed tax package. Her plan does not raise
revenue from a single source. Instead it is a
combination of a full list of individual taxes. If the
full package of taxes was adopted, it is expected to
raise approximately $605 million as follows:
- Economic nexus (requiring out-of-state
businesses to pay the same taxes that in-state
competitors pay): $73.07 million
- Addressing loopholes and abusive tax avoidance
transactions: $11.6 million
- HomeStreet Bank court case (first mortgage
interest B&O deduction): $8.6 million
- Repeal B&O tax for direct sellers (DOT foods):
$3.7 million
- Agrilink court case (preferred rate for
processing meat): $4.08 million
- Eliminate B&O exemption for bullion: $0.21
million
- Clarify taxation of corporate boards of
directors fees: $2.1 million
- Suspend sales tax exemption for livestock
nutrient management: $1.3 million
- Repeal B&O tax credit for syrup tax paid: $7.7
million
- MTCA/hazardous substance tax – rate increase to
2 percent: $148 million
- Tax on bottled water sales @ 1 cent/oz at
wholesale: $134.7 million
- Carbonated beverages @ 5 cents/12 oz at
wholesale: $93.6 million
- Cigarette tax increase from $2.025/pack to
$3.025: $88.8 million
- Impose sales tax on candy and gum: $28 million
While much of the focus in the remaining 22 days of
this 60-day session will soon turn to behind-the-scenes
budget discussions, legislative committees returned to
action today. Both the Senate Early Learning & K-12
Education Committee and the House Education Committee
held public hearings with multiple bills.
This morning the Senate Early Learning & K-12
Education Committee held a public hearing on six bills:
HB 3036, HB 1757, HB 2670, HB 2776, HB 2893 and HB 2759.
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HB 3036 would clarify and expand public meeting
and notice requirements before a school district may
contract for nonvoter-approved debt.
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HB 1757 would create a Small School District
Contingency Fund to provide three-year loans to
small school districts in financial distress.
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HB 2670 would enhance school district levy bases
by assuming Initiative 728 (Student Achievement) and
Initiative 732 (educator COLAs) were fully
implemented by the Legislature. The I-728/I-732 levy
base enhancement currently in law is set to expire
at the end of calendar year 2011; HB 2670 would
extend this sunset to December 2017. The bill would
also allow K-4 class size enhancement funding to
continue to be counted in calculation of school
district levy bases if the funding is eliminated.
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HB 2776 would adopt new funding distribution
formulas for K-12 education. This QEC-related bill
would begin the implementation of last year’s HB
2261 (Basic Education finance reform) by attaching
numerical values to allocations in the prototypical
school funding formula.
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HB 2893 would increase school district levy lids
by four percent, increase Local Effort Assistance by
two percent, and restore school district levy bases.
The bill also includes a “reverse severability”
clause, which declares that each section of the bill
represents a comprehensive plan for addressing
school levy laws such that if any section passed by
the Legislature is invalidated or not signed into
law, or if OSPI does not certify that full funding
has been appropriated for the LEA rates in the bill,
the entire act is null and void.
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HB 2759 would exclude from school districts'
levy bases state or federal allocations that are
based on non-resident students enrolled in an online
school program. This bill is intended to keep school
districts from starting online school programs for
financial motives, rather than for academic
purposes.
The House Education Committee met this afternoon and
held a public hearing on four bills: SB 6403, SB 6604,
SB 6643 and SB 6696.
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SB 6403 would expand the Building Bridges work
group and assist with various activities to support
school/family/community partnerships engaged in
building K-12 dropout prevention, intervention, and
reengagement systems.
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SB 6604 would provide school districts with
additional flexibility by repealing, suspending or
amending a series of unfunded mandates. Included in
this bill is language (Sections 14 and 15) that
would change the membership structure of the
Washington State School Directors’ Association by
amending current law provisions which provide for
automatic membership in WSSDA. OSPI, WASA and WEA
joined us in arguing against the inclusion of this
language and Committee members appeared to be
receptive.
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SB 6643 would allow second-class school
districts to submit a condensed compliance report to
OSPI, rather than submit individual compliance
reports.
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SB 6696 would make changes to educator
preparation, educator evaluation and tenure, and
establish a new education accountability system.
This is the “omnibus” bill from the governor, OSPI
and the State Board intended to implement education
reforms to enhance Washington’s application for
federal Race To The Top funds.
Finally, on Wednesday morning, Sen. Joe Zarelli
introduced a bill to help drive the discussion on K-12
funding.
SB 6858 is intended to provide for more ample,
equitable and dependable state funding for public
schools. According to Zarelli’s Budget Tidbits (Budget
Brief #6), the bill, if adopted, would:
- Restructure K-12 financing. A portion of the
current school district local levy would be
converted into the state property tax. The plan
would reduce all school districts’ local levy
authority by 12 percent and increase the state
property tax levy by an equivalent amount. The state
property tax levy — constitutionally dedicated to
the support of common schools — would be increased
by 88 cents in 2011, generating an estimated $828
million a year.
- Fully fund school districts’ pupil
transportation and operating costs. The increased
state revenues would be used to fully fund the
Quality
Education Council’s recommendations on enhanced
state funding.
- Hold all school districts “harmless. The bill
includes a “hold harmless” provision, requiring the
state to appropriate sufficient funds to ensure no
district receives total revenues that are less in
the 2011-12 school year than the total revenue
received in the prior year.
SB 6858 has been referred to the Senate Early
Learning & K-12 Committee. Because it deals specifically
with budget issues, the bill is technically exempt from
the Legislature’s early cut-off deadlines; however, it
is likely the bill, sponsored by a minority Republican,
will not be heard this session. It does provide, along
with the
Iseminger Education Funding Plan, an excellent basis
for discussion of a comprehensive funding plan for K-12
education.
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